Scott Andrews is managing director of the recently formed Wells Fargo Hotel Franchise Finance division, which is geared toward providing real estate financing to multi-unit owners and operators of franchised select-service and extended-stay hotels.
Fluent in wrangling such a platform, Andrews, prior to joining Wells Fargo this summer, ran the middle-market Hotel Franchise Finance divisions at Western Alliance Bank, GE Capital Franchise Finance and GE Real Estate, spending 17 years at GE Capital where he held various leadership positions. Andrews was formally credit trained at Bank of America as part of its relationship-management development program.
Wells Fargo has a long-standing reputation in financial circles. What was the vision behind creating a Hotel Franchise Finance division, and why was helming it appealing to you? The vision is to capitalize on a gap in coverage in the middle-market hospitality segment. Wells Fargo’s existing Hospitality Finance Group, which sits in our Commercial Real Estate business, has historically focused on larger transactions with more institutional sponsors. Our new division, within Corporate Banking, will ensure we are strategically covering the broader middle-market hospitality segment with a dedicated team of experts. Leading this new division was appealing because I could see the growth potential of this initiative, particularly given the strength of Wells Fargo and its support.
You began leading the division on July 31. What are some of the initial challenges in bringing this new platform to the attention of Wells Fargo’s target group? My credit counterpart, Josh Alesch, and I both joined the bank on July 31 to launch this new division. Since joining the bank, we have focused on staffing our teams, establishing underwriting guidelines and processes, working on internal and external marketing plans, and becoming fully operational. The news of our move traveled quickly. Almost immediately after updating my LinkedIn profile, I began receiving emails and phone calls from prior customers, who were very excited to learn of this new initiative.
How are you parlaying your previous experience to advance the platform? My prior experience leading the Hotel Franchise Finance teams at GE Real Estate, GE Capital Franchise Finance and most recently Western Alliance Bank, will help to kick-start the new division. Our team consists of the top underwriters/portfolio managers, relationship managers and loan closers who were part of our previous hospitality teams. We have each established industry contacts over the years that we will leverage when growing this new platform. Many of our prior customers will take comfort in already knowing almost every member of our new team when considering us as a go-forward financing partner. The brands also will appreciate already knowing the team as we work together to finance transactions for their franchisees.
What advantages is this platform bringing to Wells Fargo? The new division brings a leadership team and staff who thoroughly understand how to attack the middle-market hospitality segment. We understand the sponsor/borrower profiles that we will target, we know the select-service and extended-stay segments very well and we have years of proven underwriting and portfolio management experience in this segment. The new platform will provide full market coverage for Wells Fargo to complement the existing Hospitality Finance Group’s coverage of the top-end portion of the market.
What sort of activity have you been seeing in terms of demand for the division’s services, and who’s coming to Wells Fargo for these services? We already are evaluating and proposing on transactions across the country. We are looking to become a primary or secondary financing source for many of our prior customers, as well as new prospects. Also, we’ve seen interest from the mortgage brokerage community eager to learn about how our products, structures and pricing can help them in placing financing assignments.
Given our footprint across North America, the size of our balance sheet and our status as one of the largest lenders to the middle market, we can offer borrowers holistic financial solutions to help them succeed.
The lodging industry has been enjoying an extended, robust cycle, and it seems capital remains readily available for a variety of needs, from PIPs to new-builds. What does the financial landscape look like from your perspective? The financial landscape looks good from our perspective. The size and scale of Wells Fargo, coupled with our attractive product offering, should yield good results for our new division. We are planning for steady and smart growth as we ramp up.
What are some of the key concerns you’re hearing from clients? I’m not hearing any concerns from clients, mainly just clarifying questions around our loan parameters, strike zone, pricing and process. Clients also want to know the differences between our new Hotel Franchise Finance division and the Hospitality Finance Group. It’s been an easy discussion by explaining how we cover two different segments of the market. Together, we will complement each other and provide a full and robust coverage model for the bank.
You’re a veteran in the hospitality-lending arena. What are significant changes in how financing is done now? Post the last recession, lenders have maintained a more disciplined approach in their underwriting. We all understand that this industry cycles, and we have to learn from past experiences. Prudent hotel lenders are no longer sizing deals just off of the Trailing Twelve Months (TTM) period. They are evaluating the prior two-to-three years of performance history and the impact of new supply in projected years when sizing a transaction. Lenders also are leveraging the multiple industry data sources available to us when underwriting transactions. HB